Commenting on today’s labour market statistics, Ian Brinkley commented: “The underlying labour market is much weaker than the fall in overall unemployment implies. Total unemployment by the ILO measure fell by 33,000 comparing the three months to January with the previous three months. But so did total employment by 54,000 – and the decline would have been even bigger but for the increase in people on special government employment and training programmes introduced in response to the recession.

“Falling unemployment and falling employment can only be reconciled because the labour market as a whole is contracting. The numbers who are officially defined as “inactive” (not in work or unemployed by ILO definitions) and who said they wanted a job jumped by just over 60,000 over the same period. More people are simply falling out of the labour market.

“These figures are a stark warning against aggressive cuts in public spending or tax rises in the Budget next week. Indeed, the government may have to refocus and strengthen some measures, especially help for older long-term unemployed people. These groups also need some of the attention given to young people.

“By comparison, many other major OECD economies are still investing large sums in infrastructure investment, green measures and support for higher education and innovation to help sustain their recoveries. With widely expected cuts in public sector employment yet to feed into these figures, there is still little sign of a strong, sustained recovery taking hold.”